DOWNTOWN, L.A. — The president of a now-defunct Huntington Beach financial company was sentenced to 37 months in prison and ordered to pay nearly $4 million in restitution for stealing money from Santa Monica and 23 other cities that was going to be used to improve low-income housing, prosecutors said Monday.

Belinda Exon, 56, whose Rehab Financial held grants and loans in escrow on behalf of cities, pleaded guilty last July in Los Angeles federal court to embezzling about $3.9 million in federal funds from September 2002 to October 2008, according to the U.S. Attorney’s Office.

Exon’s company would administer money reserved to fix health and safety hazards and to bring low-income housing up to building codes, according to court records. Most of the money came from U.S. Housing and Urban Development funds.

Prosecutors said Exon, a resident of Phoenix, Ariz., spent the money to buy property in Arizona for herself and her Nevada-based company, CFH Properties Inc., as well as to finance two other companies she owned — Desert Foothills Landscaping Inc. and Arizona Pool and Spa Inc.

She used the embezzled money to acquire a fourplex, a triplex and a duplex in Phoenix, according to the plea agreement that was outlined in court. She also bought several parcels of vacant land in Arizona.

In handing down the sentence, U.S. District Judge Otis D. Wright II said Exon’s conduct caused not only financial harm, but left some homes “less inhabitable” and “even dangerous.”

Exon lived in Fontana when the company was founded in the early 1990s, but Rehab Financial was based out of Huntington Beach, Assistant U.S. Attorney Ranee A. Katzenstein said.

The prosecutor told Wright at a previous hearing that Exon has cooperated in the investigation of the case.

Jim Kemper, City Hall’s housing administrator, said Exon’s conduct did not jeopardize projects in Santa Monica because City Hall’s consultant covered the loss of funds. City Hall contracts with Comprehensive Housing Services to administer the Residential Rehabilitation Program, handing out checks worth on average $5,000 to rehab low-income apartments.

“The city was never out of money because the consultant felt they should be on the hook for it and it was their responsibility to go after [Exon],” Kemper said.

According to the plea agreement, San Francisco lost the most money in the scheme, $1 million. Pomona followed with $751,000, then Seal Beach and Huntington Park, with losses of $481,432 and $478,000 respectively.

Exon’s actions forced the city and county of San Francisco to tap into other funds which “prevented the city from undertaking several new multi-unit projects to abate the presence of lead and to rectify other health and safety hazards,” according to court papers.

As part of the plea agreement, Exon agreed to forfeit the properties she purchases with the ill-gotten gains and to make full restitution to the victims.

kevinh@www.smdp.com

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